Many of our clients come to us looking for a quick and easy release of funds to acquire their next project or fund the sales process of their existing ones.
Bridging loans are incredibly powerful financial devices that can act as a short-term funding option.
Originally designed to help people complete the purchase of a property before selling an existing one, bridging the gap between the purchase and the sale, they have evolved over the years. Invariably they are asset-based, unregulated loans where a property is offered to secure short-term funding for a range of different purposes rather than just purchasing a property whilst a sale is awaited on another.
What is the process for acquiring a bridging loan?
Essentially, a bridging loan involves offering a property or asset – often a residential property – as security to a lender, such as MSP Capital, and using the value/equity within the property or asset to secure a loan – normally on a short-term basis of no more than 12 months to suit requirements.
Usually, the funding will be via a 1st mortgage over the property. Sometimes, however, if there is sufficient equity, we can assist via a 2nd mortgage – subject to 1st charge holder approval.
Each lender will have their own lending parameters that dictates the maximum that can be lent. At MSP Capital, our standard lending parameters are up to 70% of the value of a residential property or 65% of the value of a commercial property.
After you’ve called us, we will assess the asset that you’re offering to us to lend against. The value of the property will be assessed by way of a formal independent valuation, which is undertaken on behalf of MSP, but payable by you or the company you’re working for.
We will then prepare a loan offer including any fees and interest across the term of it. This all depends on:
- The amount borrowed
- The percentage borrowed against the property value; and the term the loan is required for.
Our terms are fully detailed in an Offer of Finance, which if accepted, we can then move forwards. We know that we can quicker than our competitors in the bridging loan sector, which is a major factor in securing funding.
At MSP Capital we lend our own funds, so, if appropriate, loans can be approved and credit backed within 24 hours of the initial enquiry. Drawdown of funds with MSP Capital can occur in a matter of days if the legal and valuation process can be expedited efficiently.
What is the general length of term for a bridging loan?
MSP provide bridging loans for various periods of time to suit each borrower’s individual requirements. On the whole, bridging funding is generally considered as ‘short-term funding’.
For example, the standard period for a straightforward bridging facility on a residential property would be up to 12 months. That said, 6-month terms are commonplace, although the loan can be repaid at any time from the day it is drawn. Repayment will be expected before the agreed term has expired although an extension will sometimes be required subject to agreement.
Facilities can be agreed and provided in a very short space of time and provide the ultimate flexibility that enables clients to have confidence that funding is in place to either raise short-term cash for acquisitions or general business cash flow. They can also be drawn to provide a developer time to either sell the property asset or arrange longer-term finance.
We’re here to help you with your bridging loan request.
MSP Capital can provide bridging loans to any legal entity including limited companies, limited liability partnerships and in sole names.
As an unregulated lender, MSP bridging loans focus on the property value (we lend up to 70% of RICS valuation) more so than debt serviceability, which adds to the speed and flexibility when providing the facility.
To view MSP’s fully encompassing offering of bridging loan products, see our Bridge Loan Overview page. Alternatively, if you’re are keen to chat through your options for your upcoming or existing project, please contact the team at MSP Capital on 01202 743400.